Govt to clear Hwange Col­liery debts by Oc­to­ber

Chronicle (Zimbabwe) - - Business - Ti­nashe Ma­kichi Harare Bu­reau

GOV­ERN­MENT ex­pects to clear a sig­nif­i­cant por­tion of Hwange Col­liery Com­pany’s debts by early next month to pave way for the im­ple­men­ta­tion of new strate­gies aimed at re­viv­ing the com­pany.

The coal miner has been ne­go­ti­at­ing a num­ber of debt clear­ance in­stru­ments and cred­i­tor pay­ment plans aimed at clean­ing its bal­ance sheet. Hwange Col­liery’s debt is es­ti­mated to be around $300 mil­lion.

Mines and Min­ing Devel­op­ment Min­is­ter Wal­ter Chid­hakwa on Mon­day said Gov­ern­ment has been scout­ing for po­ten­tial strate­gies aimed at re­viv­ing the coun­try’s largest coal miner.

Strate­gies be­ing mooted by Gov­ern­ment in­clude sell­ing part of the com­pany’s houses to em­ploy­ees to off­set salary ar­rears cur­rently sit­ting at $59 mil­lion while $69 mil­lion worth of debt will be con­verted to equity.

“Out of the 5 000 houses at Hwange Col­liery we sold off 1 000 houses to sit­ting ten­ants. The sold houses are ex­pected to deal with the $59 mil­lion owed to the em­ploy­ees as salary ar­rears and we hope that a sig­nif­i­cant amount of this debt will be taken away.

“Gov­ern­ment has also taken $69,1 mil­lion which is to be con­verted into equity or a longer fi­nanc­ing fa­cil­ity which will then cleanse the bal­ance sheet of Hwange,” said Min­is­ter Chid­hakwa.

Gov­ern­ment is look­ing at shed­ding off some of Hwange Col­liery’s non-core op­er­a­tions, in­clud­ing ra­tio­nal­i­sa­tion of its work­force from the cur­rent 3 200 to lev­els that are com­men­su­rate with pro­duc­tion.

The Col­liery Com­pany is also on the verge of strik­ing cok­ing coal sup­ply agree­ments with South African firms.

Min­is­ter Chid­hakwa said the orig­i­nal plan for Hwange Col­liery was to pro­duce cok­ing coal and not ther­mal coal, a sit­u­a­tion which has seen the com­pany fail to per­form within ex­pec­ta­tions.

“We are in the process of sort­ing out a scheme of ar­range­ment with other cred­i­tors and I know by the 10th of Oc­to­ber we would have cleaned the bal­ance sheet of Hwange and that will en­able us to move for­ward with our signed agree­ments,” he said.

The min­is­ter said Gov­ern­ment is in the process of try­ing to switch back to the orig­i­nal model of pro­duc­ing cok­ing coal and a mar­ket is be­ing made ready in South Africa.

Min­is­ter Chid­hakwa added that the mo­tive be­hind those strate­gies was to make sure the com­pany bounces back to prof­itabil­ity for the ben­e­fit of the econ­omy in gen­eral.

“Coal pro­duc­tion has gone down sig­nif­i­cantly at Hwange Col­liery and as Gov­ern­ment we have been look­ing at why Hwange Col­liery came down from mak­ing a profit of $14 mil­lion a year and now mak­ing huge losses.

“We have con­tracted peo­ple who told us that the orig­i­nal model for Hwange was based on pro­duc­ing cok­ing coal and not ther­mal coal.

“This meant that to pro­duce cok­ing coal you need a mar­ket be­cause the prices of cok­ing coal are much higher and re­turns are much big­ger than those of ther­mal coal,” said Min­is­ter Chid­hakwa.

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